Morgan Stanley “Institutional” Bigwig Shaffer Takes a Walk

(Adds departure of another Graystone veteran in Michigan in the eighth and 10th paragraphs.)

Phil Shaffer, whose long experience managing foundation, endowment and family-office money at Morgan Stanley and predecessor companies generated internal fame and fortune for himself and the firm, left the company earlier this week.

She declined further comment on the reason for his departure, and Shaffer did not return calls for comment.

The veteran advisor, who began his career at E.F. Hutton in 1980 and was on the ground floor of its development of “consulting firm” managed accounts, plans to open an independent registered investment advisory practice with two young advisors, including his son, and two or three associates, according to a person familiar with his plan. Each of his partners in the new firm has been a registered representative for less than two years, according to their BrokerCheck histories.

The bulk of the team is remaining with Graystone, and were scurrying on Friday morning to reassure accounts of the team’s stability.

“We’re very comfortable with them,” saidSusan Dogt, a trustee of the Hilda E. Bretzlaff Foundation in Milford, Michigan, which has used Graystone for about 25 years to manage its endowment that finances scholarships for students with high moral values and conservative, capitalistic beliefs. “They are superb, and we haven’t dealt with Phil Shaffer himself for years.”

She declined to comment on what she had heard about the reason for Shaffer’s decision. Several people on the team remaining with Graystone said they could not immediately comment.

The departure was part of a one-two blow to Morgan Stanley wealth executives this week. In Birmingham, Michigan, the elite Graystone division lost 20-year Morgan Stanley/Smith Barney veteran Michael Holycross and two associates, the Morgan Stanley spokeswoman confirmed.

Shaffer has ranked among Barron’s top “institutional” wealth managers since the magazine began compiling the report, according to his LinkedIn site, while Shaffer has been a Top 100 FA for the past seven years. The practice ranked 13th in Barron’s 2017 institutional poll with $3.8 billion of assets under management, down from tenth in 2016.

Holycross’s team ranked 27th on the magazine’s most recent “institutional” list. The advisor did not return a call for comment about his future plans.

A midwestern financial advisor who is familiar with Shaffer’s group but did not know about the split said the broker was heralded within Morgan Stanley for having opened private equity investments to Grayestone clients through an arrangement he developed with Hamilton Lane, a fund-of-funds company.

Many of the firms, families and endowments that work with such advisors are too small to be able to afford private-equity management fees and minimum contributions, but Shaffer arranged for multi-year contributions at lower-than-conventional rates, said the source, who spoke on condition of anonymity.

Shaffer’s plan to go independent appears to have leaked, accelerating his departure, according to people familiar with his decision. That has complicated formation of the RIA, and may have exacerbated questions about his team agreements and the status of revenue-sharing arrangements, a sensitive issue at large practices with extended roots in multiple offices.

Joining Shaffer, who people said has been spending more time away from Columbus at a home in Florida, are his son Joshua, advisor Norman Cook and “investments director” Lee Caleshu. They declined to comment or did not return requests for comment.

Last summer, one of Shaffer’s partners, Michael Birgeneau, left Graystone for Silvercrest, a New York-based family office.